There are many mortgage programs that allow for alternative income documentation. Alternative income documentation is using non-traditional methods of documenting income. Traditional methods would be using pay-stubs, W2 forms and income tax returns. An example of alternative income documentation would be to use a 12 months bank statement program to document income.Alternative income may be stated income, stated assets, 12 month bank statements personal or business, 24 month bank statements personal or business, no income no asset loans and no ratio loans.
Taking this one step further you may also choose to go the stated income/stated asset route. Most lenders require some type of reserves and on stated asset you are not required to show this money.
You may also elect to choose a stated income loan instead of providing W2's or tax returns to expedite the processing of your loan. With a stated income loan you state your actual income on your loan application but usually the most documentation the underwriter will want is to get a verbal VOE or a copy of your business license to prove you have a job currently and you have had a job for the past 2 years.
Alternative income is another way to qualify for a loan. If you cannot qualify the traditional way with paycheck stubs and tax returns the lenders will still work with you. There was at one time a lot of money being lost due to turned down loans because of income. Lenders recognized this and have made adjustments to there lending guidelines. Now there is alternative income, stated income, no income no asset... Just to name a few.
When using bank statements as proof of income, some lender banks use the average gross deposits as total income, others use net deposits. Net deposits are gross deposits minus withdrawals. Naturally, a borrower is considered to have higher income if a bank does not include withdrawals in its income calculation. Transfers from one account to another are usually not considered as income.
Home
